SP500: Last Chance to Delay The Inevitable Top

By - Jun 14, 2015, 2:40 PM CDT

Monthly time frame:

Even though there is still no indication of a reversal (From the February low we have a sequence of higher lows) the incapacity to sustain a breakout from the February high is flashing a serious warning that the trend is vulnerable

Multiple failures could lead to a reversal if price breaches the last higher low at 2068

The loss of the 10 mma = 2057 (End of month print) could open the door to a new bearish cycle

Ending Diagonal is set and done. If next week the 27 w ma = 2079 is breached we could make the case that SP500 has concluded an Ending Diagonal at the May high. If this is the case a Major Top should be in place. The initial target of the ending pattern is located at the October 2014 low (13% decline)

However an Ending Diagonal is usually followed by a sharp decline (Impulsive down leg). This has not been the case. In the 60 min chart we can see that the decline from the May high to last Tuesday's lod has unfolded a Zig Zag (ABC = Corrective pattern). Therefore Elliott Wave wise we should not underestimate the probability that this pullback does not belong to a larger downward pattern:

Ending Diagonal is still underway: If the 27 wma holds and the 10 wma = 2109 is reclaimed then there could be one more leg up with a potential target 2140 (Trend line that connects the February and May high)- 2151 (Upper Bollinger Band) or even it could reach the upper trend line of the assumed wedge at 2170ish

If this is the correct ending pattern the McClellan Oscillator must establish a higher low (Above the 10 dma) and a higher high without failing at the zero line. (Similar pattern unfolded at the May low)

Related posts

Leave a comment

Name

Email

Captcha

Comment

We will save the information entered above in our website. Your comment will then await moderation from one of our team. If approved, your data will then be publically viewable on this article. Please confirm you understand and are happy with this and our privacy policy by ticking this box. You can withdraw your consent, or ask us to give you a copy of the information we have stored, at any time by contacting us.